Bangalore, May 27 - Nuts and snacks seller Diamond Foods Inc posted a better-than-expected quarterly profit, helped by robust snack sales and Easter promotion, and raised its outlook for fiscal 2009, sending its shares up 6 percent.
The company continues to spend heavily on its promotions for both snack and culinary nuts and reinvest in its business for future growth, analyst Akshay Jagdale of KeyBanc Capital Markets told Reuters.
Advertising expense for the third quarter leaped 41 percent to $9.0 million, reflecting higher television and print media promotions for its Emerald brand.
Diamond Foods, which makes and sells cooking nuts under the Diamond label and snack nuts under the Emerald brand, has been performing well consistently over the past few quarters, despite the recession, driven largely by sales at its snack segment, which continues to grow.
Jagdale believes the company has a lot of innovation in its products and is able to get new distribution which has allowed it to weather the financial turmoil.
"So, it's not like the category is growing and people are eating more nuts. It's just that people who are eating nuts are eating more Emerald nuts rather than (nuts from) planters," he said.
For the quarter ended April 30, the company earned $2.7 million, or 16 cents a share, compared with $1.1 million, or 7 cents a share, a year earlier.
Net sales grew 11 percent to $111.0 million. North American retail sales, which are the focus of the company's growth efforts, grew 37 percent, while snack sales more than doubled.
Analysts on average were expecting earnings of 14 cents a share, before items, on revenue of $103.5 million, according to Reuters Estimates.
For fiscal 2009, the company expects a profit of $1.31 to $1.36 a share, excluding net non-recurring charges of about 3 cents a share. It had previously forecast earnings of $1.27 to $1.34 a share for the period.
The snacks seller, which competes with privately held Blue Diamond Growers and industry giant Kraft Foods , also raised the lower end of its fiscal 2009 sales-outlook range.
It now expects net sales of $550 million to $565 million, compared with its prior estimate of $535 million to $565 million.
Shares of the Stockton, California-based company were trading at $27.20 after the bell. They closed at $25.66 Wednesday on Nasdaq.